Are markets headed for a new high? Some insights before heading into the week

Updated: Aug 25th, 2024


The week gone by had plenty of action and markets built on the super booster dose of Aug 16, when it registered super gains of over 1,300 points on BSE Sensex and 400 points on Nifty.

This week saw no jump but they built on the head start and inched upwards to set up what could be a flourish in the coming week.

BSE Sensex gained 649.37 points or 0.81 % to close at 81,086.21 points while Nifty gained 282 points or 1.15 %% to close at 24,823.15 points. The broader markets saw BSE 100, BSE 200 and BSE 500 gain 1.26%, 1.31% and 1.53% respectively. BSE Midcap was up 1.96% while BSE Smallcap gained 3.39%. During the week, BSE Sensex gained in four sessions and lost a tad in the opening session of the week, while Nifty gained in all five trading sessions. Markets are within striking distance of all-time highs made on Aug 1, earlier this month.

The Indian Rupee gained 7 paise or 0.08% to close at ₹83.89. Dow Jones had a decent showing backed by a superlative effort on Aug 23, the closing day of the week when it gained 462 points. This helped Dow gain 515.32 points or 1.27% to close at 41,175.08 points. Dow gained on three of the five trading sessions and lost on two.

Activity in primary markets

Shares of Saraswati Saree Depot Limited which were issued at ₹160, listed on Aug 20, debuted at ₹200 and closed at an upper circuit of ₹209.95 on day one. The gains made were ₹49.95 or 31.21%. By Aug 23, the share witnessed profit-taking and closed at ₹180.10, a gain of ₹ 20.10 or 12.56% on BSE. On NSE, the share closed lower at ₹177.95, a gain of ₹17.95 or 11.21%.

The issue from Interarch Building Products Limited which had opened on Aug  19, and closed on Aug  21, received excellent response. The price band was ₹850-900. The issue consisted of a fresh issue of ₹200 crore and an offer for sale of 44,47,630 shares. The issue was subscribed 93.81 times overall with the QIB portion subscribed 197.29 times, the HNI portion subscribed 130.93 times and the retail portion subscribed 19.5 times. There were 24.42 lakh applications in all.

The second issue to tap the capital markets was Orient Technologies Limited which opened its issue on Aug 21 and closed on Aug 23. The issue consists of a fresh issue of ₹120 crore and an offer for sale of 46 lakh shares, in a price band of ₹195–₹206.

The company is an information technology (IT) solutions provider headquartered in Mumbai. The company reported revenues of ₹602.89 crore for the year ended on March 24 with an EBITDA margin of 9.39% and a PAT margin of 6.87%.

Their EPS for the year was 11.80 and the PE band was 16.53-17.46. The company has entered the promising and lucrative business of cyber security which is a crucial and fast-growing area and also enjoying higher margins. The issue was subscribed 154.87 times overall with the QIB portion subscribed 188.79 times, the HNI portion subscribed 310.07 times and the retail portion subscribed 68.98 times. There were 29.26 lakh applications.

With a larger number of participants making money in the markets, the system is flush with liquidity, and one therefore is witnessing huge subscriptions in the primary markets and entire selling of FPIs being absorbed in the market as well. While quarter one results were overall poor, witnessing the lowest growth in eight quarters, there has been no impact on markets whatsoever. While this is a cause of concern, the market mood and sentiment are not only positive but extremely buoyant.

There are two issues opening and closing in the week ahead. The first is from Premier Energies Limited which is opening on  Aug 27, and closing on Aug 29. The issue consists of a fresh issue of ₹1,291.4 crore and an offer for sale of 3.42 crore shares in a price band of ₹427–₹450.

The company is an integrated solar cell and solar module manufacturer with 29 years of experience. The company makes PV (photovoltaic) cells and also manufactures solar modules. The company reported revenues of ₹3,143.79 crore for the year ended on March 24 and a profit after tax of ₹231.36 crore.

In the first quarter of the current year, it reported revenues of ₹ 1,657.36 crore and a profit after tax of ₹196.16 crore. The EPS for the year ended on March 24 was ₹6.93 while on a fully diluted basis, it was ₹ 5.48. The PE ratio on this EPS is 77.92-82.12. If one looks at the EPS earned by the company in the first quarter after new capacities were added towards the end of the financial year 2024, the same has improved significantly to ₹5.93 and on a fully diluted basis to ₹ 4.70. This is significantly higher than the previous full year’s EPS of ₹5.48.

Besides the IPOs, PE investors are raising money through secondary markets and every week we witness a number of transactions where shares are sold through bulk deals. Everything on offer gets mopped up and there is no dearth of demand.

Coming days for the market

Coming to the markets in the week ahead which has August futures expiring on Aug 29, markets would be volatile and choppy. The present value of the August series is higher by 417.05 points or 1.71% at 24,823.15 points.The week ahead has two listings as well besides a spate of roadshows and issues opening and closing. With liquidity bursting at the seams and no dearth of the same, the setting is all in place for an imploding week at the markets.

In conclusion, trade cautiously as the possibility of posting a new high, and markets again correct as they did post Aug 1.

(Arun Kejriwal is the founder of Kejriwal Research and Investment Services. The views expressed are personal)

(This story was taken from a syndicated feed, and edited only for style by Gujarat Samachar Digital staff)

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